Means and ends for energy policy?

– Lessons learned from other countries

Unlike many other countries that do not have their own fossil fuels, Sweden has chosen to base its energy policy on instruments that, generally speaking, do not promote one specific form of technology. This means Sweden’s energy policy is more like that advocated by countries such as the Netherlands, Great Britain and the USA who have strong interests in the continued use of oil, coal or natural gas. Countries such as Denmark, Germany and Italy belong to a group that wants to create a new industry within the field of renewable energy and to achieve this, they use instruments that are directed at specific types of technology.

The aim of the EU’s energy policy is to create an ecologically sustainable energy system that has competitive energy prices and high supply reliability. The way countries have chosen to achieve this differs considerably. National interests represented by institutions, stakeholders, companies and laws are driving a move towards specific technological solutions. In Sweden, the base industry’s need for low energy prices is an example of a national interest that influences the entire energy policy. In the Netherlands, energy policy is governed by strong interests in natural gas. German Energiewende focuses on building up a new industry linked to the use of renewable energy. These different interests lead to different types of subsidies on the energy markets and other measures that affect energy prices in different directions.

By comparing the energy policies of twelve different countries, it is possible to formulate three central issues for the development of Sweden’s energy policy. These are:

Within which areas is it suitable to use instruments that will bring about a cost-effective transition?

Which areas need innovation and a policy mix that creates a logical innovation chain?

How should instruments be shaped so as to promote sustainable energy use?

On the basis that energy policy is to be shaped to maintain competitive energy prices and reliable energy supplies but at the same time become ecologically more sustainable, the overall assessment is that the production of electricity and district heating in Sweden are areas that are suitable for more cost-effective instruments such as taxes and quota obligation systems. Both electricity and district heating production are already relatively ecologically sustainable.

Energy use in the transport sector and energy-intensive industries constitutes a major challenge facing efforts to make the energy system in Sweden ecologically more sustain­able. The entire innovation chain is in great need of interventions. To successfully bring about this development in Sweden, technology-specific instruments are needed, for instance, demonstration plants, directed investment aid, and the adaptation of existing legislation so that commercialisation is not unnecessarily impeded and delayed. Strategies are needed to identify what interventions are required. Not least, such a strategy is needed in order to implement active policy in the EU.

Given that energy prices do not fully reflect actual socioeconomic costs, instruments are needed that will adjust the prices in the right direction and in a transparent way. This is especially important for long-term capital-intensive investments in infrastructure, buildings and heating systems. Sweden needs a strategy for sustainable energy use whose point of departure should be the ability to handle the risks of high energy prices in the future and the consequences they could have on competitiveness, supply reliability and ecological sustainability.

Title
Means and ends for energy policy? – Lessons learned from other countries